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29.11.2017 9:52

Shell returns to pure cash dividend, focus on renewables

The company raised planned investment in renewables and low carbon technologies to $2 bln until 2020

AUTHOR: publics.bg

© The new energies division is planned to be one of Shell’s main growth engines after 2020

Royal Dutch Shell will return to paying pure cash dividends and step up its investment in cleaner energy as it turns a corner after more than two years of cost cuts and disposals prompted by weak oil prices, Reuters reported.

Shell Chief Executive Officer Ben van Beurden sought to strike a balance between reassuring investors it can increase returns in its core fossil fuel business during an “era of volatility” in oil prices while preparing to step up investments in renewables.

The Anglo-Dutch company said it will abolish its scrip dividend, through which investors can opt to receive dividends in shares or cash, in the fourth quarter of 2017. The scheme was introduced in early 2015 to help preserve cash after oil prices fell by more than half from over $100 a barrel and the company bought BG Group in a $54 billion deal.

BP had pipped its rivals when announcing last month that it would resume share buybacks in the fourth quarter in order to offset the dilutive effect of the scrip dividend. Norway’s Statoil has also eliminated its scrip dividend, Reuters reminded.

Shell, which has bet largely on a growing demand for natural gas in the transition to cleaner energy, also set out ambitious targets to reduce its carbon footprint. It raised planned investment in its new energies division which focuses on renewables and low carbon technologies to $1-2 billion until 2020 from the current $1 billion.

“We have to start somewhere and we have to build a platform that can participate and grow actively in further electrifying the world,” van Beurden told reporters. The company, which has made a number of investments in electric vehicle technology in recent months, said it will aim to reduce emissions of greenhouse gases by 20 percent by 2035 and by half in 2050. The targets will be expanded to include all of Shell’s operations, van Beurden said.

The new energies division is planned to be one of Shell’s main growth engines after 2020 and generate returns of 8 to 9 percent, Chief Financial Officer Jessica Uhl said.